MTN says will pursue Reliance talks amid Ambani family feud

Agencies|

Jun 14, 2008, 02.13 PM IST

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NEW DELHI: South African telecom giant MTN said Saturday it was still pursuing merger talks with Reliance Communications amid a family feud over who has the first right to buy the Indian cellular operator.

The statement came after billionaire Mukesh Ambani, 51, head of Reliance Industries Ltd (RIL) asserted he had first right of refusal to purchase his estranged younger brother Anil Ambani's controlling stake in Reliance Communications.

"Nothing has changed. We are still having talks with Reliance Communications," MTN spokeswoman Nozipho January-Bardill said from Johannesburg, declining to comment further.

"Talks are on track, in fact they are progressing well," said a Reliance official, who asked not to be identified.

The claim by Mukesh Ambani, India's wealthiest man, could threaten the 70-billion-dollar merger talks between Reliance Communications and MTN, Indian media quoted lawyers as saying.

The news made the front pages of Indian business press, with Mint newspaper headlining "Ambani brothers at each other's throats," and the Business Standard declaring "Mukesh calls MTN to disconnect Anil".

The row signalled another low in relations between the battling brothers who were joint owners of the Reliance empire before carving it up in 2005.

Reports have said a deal would involve a so-called "reverse merger" under which Reliance Communications would become a subsidiary of MTN but with Anil as the largest single shareholder and likely chairman of the merged entity.

Reliance Communications is the flagship of Anil Ambani's group and has 48 million subscribers. It accused RIL of seeking to "disrupt creation of one of the world's most valuable communications companies".

The row erupted after a source close to the talks told AFP earlier in the week the two sides were at an "advanced stage" in efforts to create a global top-10 telecoms giant stretching from Asia to the Middle East and Africa with a subscriber base of 116 million.

MTN, which has 68 million subscribers, is Africa's largest cellular operator. The two sides entered exclusive 45-day discussions on May 26 to build an emerging market powerhouse after India's top mobile phone company Bharti Airtel ended talks with MTN in a dispute over control.

Reliance Communications said RIL's claim was "borne out of mounting despair and frustration" over the "continuing success" of Anil Ambani's group.

RIL hit back, saying it had "in good faith" notified both the Anil Ambani group and MTN of stipulations in a January 2006 settlement agreement that it had first right refusal to buy the controlling stake in Reliance Communications.

However, Reliance Communications said the pact was "unilaterally" signed by RIL when it was under RIL's control.

It said the Bombay High Court ruled the agreement "unfair and unjust" in October 2006 - a ruling Reliance Industries reportedly appealed.

Indian media reports quoted corporate lawyers as saying both brothers could have strong cases and the matter could end up in the courts.

The latest fight stems from a feud between the brothers over control of the multi-billion-dollar Reliance empire left to them by their father Dhirubhai Ambani.

The bruising fight ended three years ago after their mother brokered a deal under which the brothers split up India's largest private sector conglomerate.

Mukesh kept the oil, gas and petrochemicals businesses of the group flagship Reliance Industries. Anil got Reliance Energy, one of India's biggest power utility firms, the phone company and Reliance Capital, the group's finance arm.

The brothers have been competing to outdo each other since their father's death and observers say the last time they appeared united was at their father's funeral pyre in 2002.

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